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Supporting Postal Services Through Location-Based Fees

In: Postal Strategies

Author

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  • Timothy J. Brennan

    (University of Maryland-Baltimore County)

Abstract

In Brennan (The postal and delivery contribution in hard times. Springer, New York, 2022), I found that the US Postal Rate Commission’s (PRC) preferred method for adjusting postage for falling demand implied that the cost of postal service is a simple linear function of volume and the number of locations. Among the implications of this result is that adjusting postage for changes in volumes would be unnecessary. Based on this result, US postal data indicates a fee of about $100 per year per location. However, the marginal cost per location likely differs between urban and rural areas, home delivery and neighborhood boxes and business and residential service. Location costs would have to be refined considerably before United States Postal Service (USPS) or any other postal operator could adopt location fees to address volume reductions. These difficulties suggest that the PRC’s method of adjusting postage rates based on volumes per location needs to be reconsidered.

Suggested Citation

  • Timothy J. Brennan, 2023. "Supporting Postal Services Through Location-Based Fees," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), Postal Strategies, pages 239-252, Springer.
    • Handle: RePEc:spr:topchp:978-3-031-25362-1_18
    DOI: 10.1007/978-3-031-25362-1_18
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